Abstract
When planning for a new urgent care business it is important to prepare a thorough business plan, consider all upfront and ongoing expenses, and account for required contingency funds. There are various sources of capital depending on the specific strategic vision. Site selection is essential, and demographic data must be analyzed to determine optimal location. There are numerous legal issues to be considered, and it is important to create a compliance program. To be successful, an urgent care must effectively market their services and pay close attention to the drivers of customer satisfaction.
Keywords
business plan, compliance, contracting, contingency funds, customer satisfaction, demographics, EBITDA, fixed cost, lease consideration, legal, marketing, sources of capital, site selection, variable cost
1
What are the key components of a business plan?
When developing a business plan for a new urgent care (UC) business, it is important to include the following components: concept (description of the project, problem you are solving, benefits to customers, and why it will succeed), market assessment (industry overview, target market, competition, potential market size, and expected penetration), strategy, operations, marketing activities, corporate structure, financial data, and risks involved.
3
What expenses should be considered after the opening of a new UC center?
It is very important to calculate the expected ramp-up losses. These should include personnel expenses (salary, payroll taxes, benefits, malpractice coverage), rent and related costs, marketing expenses, supplies, billing and collections, miscellaneous fees, and accounts receivable.
4
Is urgent care a variable or fixed cost business?
Urgent care is primarily a fixed cost business. The only true variable cost is supplies. Personnel are semifixed, because as volume grows, new staff need to be added incrementally. Because urgent care is a fixed cost business, profitability is volume driven. Once fixed costs are covered, a very high percentage of additional revenue will increase profits. It is important for an urgent care business to determine its initial breakeven volume and then recalculate as staffing increases.
4
Is urgent care a variable or fixed cost business?
Urgent care is primarily a fixed cost business. The only true variable cost is supplies. Personnel are semifixed, because as volume grows, new staff need to be added incrementally. Because urgent care is a fixed cost business, profitability is volume driven. Once fixed costs are covered, a very high percentage of additional revenue will increase profits. It is important for an urgent care business to determine its initial breakeven volume and then recalculate as staffing increases.
5
What are the different sources of capital to fund an urgent care business?
Sources of capital include friends and family, bank loans, finance companies, landlord contribution, equipment leasing, angel investors, venture capital, and private equity. For a newer company, the best sources of funding are investment by the founders, banks loans, and landlord contribution. As the company grows to a multiple site practice, the other funding sources may become better options.
6
You figure out how much cash you need until you expect to break even and are able to secure the funds from friends and family. Should you be ready to take the leap?
No, you need to anticipate issues that may arise and increase your costs. Examples include permit or construction delays that result in a delayed opening even while paying rent, unanticipated capital or operating expenses, a slower ramp-up than predicted, and delays in reimbursement from insurance companies. It is essential to have contingency funds to cover these unexpected expenses, as much as 50% more than your calculated needs.
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